In some instances, it can be an impatience to inherit or having a sense of entitlement because their care of the parent can justify their accessing funds to which they feel entitled. This could involve frequent dinners out, filling up the gas tank, or paid vacations for all their help … and typically the rest of the family has no idea that it’s happening. It’s not uncommon to have a sibling who cares for the senior parents end up feeling entitled to a tropical vacation, a new car, or a down payment on a house on the parents’ tab, while the other siblings are unaware that this is happening to their parents.

Many state laws aren’t sufficient to protect elders in these types of situations. Currently, investigations go nowhere because, in many cases involving familial elderly abuse, it’s one person’s word against the other. Therefore, what can a person do to protect a senior when the adult children have reasonable explanations for money spent or money that’s needed?

With rates of elderly abuse running this high, specifically financial abuse, seniors are advised to develop a financial plan with a trusted person, so that more than one adult child or one adult child and spouse are involved with their financial situation.

Estate planning and elder law attorneys can help with planning and strategies to prepare for these financial possibilities in a family. Financial and estate planning can provide answers to questions about how bills will be paid if the person becomes incapacitated, and address potential feelings of entitlement as well as the potential for discord among children.

These are admittedly tough topics and some families will no doubt encounter challenges when taking the bull by the horns, but it is better to get these issues out in the open and prepare for what may occur.

Preparing for all possible outcomes, from good health to incapacity, will give you peace of mind and lets your children know that you are ready for the eventualities of your later years. Your surviving spouse and family will be stronger for it.

05/29/2017

For most individuals, the longer the delay, the better, but what if your situation is different?

Choices that you make about Social Security can make a big difference in your retirement income. Most people understand that the longer they wait to take benefits, the higher their monthly payment will be. However, as reported in Kiplinger’s December article, “Social Security: Delay or Hit Go?,” that’s not the right answer for everyone. You’ll be able to make a better decision, if you understand how Social Security rules work and by making an honest assessment of your individual situation.

Social Security 101. First, a short tutorial on Social Security benefits and how they're calculated. What the federal government deems you to be at full retirement age benefit begins between ages 65 and 67, based on when you were born. The amount of money that you receive is based on an inflation-adjusted average of your 35 highest-earning years. You can begin collecting Social Security benefits as early as age 62—but your monthly benefit amount will be permanently locked in at about 30% less than your full benefit amount, which depends on your current age, full retirement age, and income. If you can delay taking your benefits, they’ll grow. If you delay until age 70, your monthly Social Security benefit will be about 135% of your full benefit.

Whether you’re better off waiting to get fewer years of higher income or starting earlier to get more years of lower income really depends on your individual situation. Some of the factors that should be considered include other income sources, your life expectancy, your spouse's benefits, and your risk profile. While there's no one correct answer to the question, there are some ways of thinking about benefits that can help you to find the right answer.

Spousal Benefits. If you're married or were married for more than 10 years and didn’t remarry, you may be eligible for spousal benefits at a maximum of 50% of your partner's full retirement age benefit.

Interest Rates. Each year you delay taking benefits "earns" you an additional 8% in Social Security income down the road, giving you a very attractive rate of return—and Social Security is guaranteed. Social Security benefits are also indexed to inflation, so when you begin receiving your checks the income will keep pace with the rising cost of living. Think about that fact when choosing between starting Social Security and using your investments to supplement retirement income. It is also important to understand that your decision could affect your estate plan, since using your investment assets could result in less money in your estate.

Longevity and Health. People who rely on Social Security to fund their retirement may not have the option to delay taking benefits when they retire. If your health is poor and you don’t expect to live into yours 90s or even 80s, then delaying benefits may not be a priority for you.

Some of these issues are easier to grapple with than others. Generally speaking, consider all of your circumstances, from retirement income to longevity, before making a final decision about Social Security benefits.

05/26/2017

The power of attorney does not mean you are yielding control of your life. Instead, it will protect you, should something unexpected occur.

There are many unexpected ups and downs in life, and having an estate plan in place is how responsible adults do their best to protect themselves and their families, according to The Villager, in an article, “Power of attorney protects loved ones.”

A power of attorney (or “POA”) is a document that allows a person to designate a person or organization to manage his or her affairs in the event he or she is unable to do so. The specific laws for creating a power of attorney vary based on the state where a person lives, but there are some basics common to all.

Without a POA for financial, medical, and other pertinent information, family members may be unable to act without court intervention. In those cases, the state may appoint a person to make decisions for an individual, if there is no POA.

The main types of POA are the general power of attorney, health care power of attorney, durable power of attorney and special power of attorney. While some of the responsibilities in these documents can overlap, there are some legal differences. A durable power of attorney concerns all of the appointments involved in general. The document will remain in effect or take effect, if a person becomes mentally incompetent. Certain powers of attorney may terminate at a specific time.

Depending on the terms of the document, an agent appointed through a power of attorney may make decisions in the following areas for an incapacitated individual: banking, the sale or purchase of property, filing tax returns, coordinating government-supplied benefits, deciding medical care and making estate-planning decisions.

A power of attorney sounds like a straightforward document, but it is most effective when it is part of an overall estate plan. An experienced estate planning attorney will be able to create a plan that includes this and other critical estate planning documents that every family should have.

05/24/2017

We call it the brother-in-law syndrome. You know–the know-it-all who brags about how his will is better than anyone else’s, and his estate won’t go through probate because hey, he’s got a will.

For the layperson, figuring out all of the ins and outs of creating an estate plan can be challenging. That is why most people work with an estate planning attorney. The probate process has its own set of rules and requirements, and an estate planning attorney will help educate you while creating a plan so that you and your family will understand what will take place after you pass.

The Treasure Coast Palm’s article, “Common misconceptions about wills and trusts,” says that some folks think that having a Last Will and Testament prepared means their estate will avoid probate. That’s simply not true. The primary purpose of the probate court is to make sure that a decedent’s assets are passed to the proper heirs and beneficiaries. The will is a statement to the court of the decedent’s wishes as to how he or she wants assets to be distributed after death.

However, everyone needs a will. Additional estate planning, like a revocable living trust, may be needed to avoid the probate process.

Another common mistake is that people don’t need an estate plan because they aren’t worth much money. Some folks believe that if their estate is less than the Federal Estate Tax Exemption amount, there’s no need for a revocable trust. This is not true. The exemption figure is the amount that can pass to beneficiaries without any federal estate tax. Some states have estate taxes, and there are many other issues that may arise when a person passes away. Any amount of money—regardless of how much or how little—will need to be probated without proper planning.

Some people have the concern that putting property into a revocable trust will limit what they can do with the property during their lifetime. But a revocable trust that’s properly drafted by an experienced trust attorney can be completely amendable and revocable during the lifetime of the person who creates it. Anything placed in the trust is under your complete control as trustee of the trust. Therefore, you have no limits as to what you can do with a property that’s put into a revocable trust.

The goal of estate planning is to use wills, trusts and other estate planning tools to achieve your goals for your family, whatever they may be. An experienced estate planning attorney will be able to create a plan that works for your family, and will help you to avoid the misinformation that is readily available.

05/22/2017

It is possible for anyone to become incapacitated or die prematurely. Estate planning in advance can help you and your family.

Live long enough, and you learn that death can strike in a heartbeat. The healthiest person can become incapacitated. It’s not pleasant to think about, but the reality is, having an estate plan in place is the wise way to go, according to The Arizona Jewish Post in“Estate planning and elder law benefit all ages.”

Estate planning and elder law attorneys say that everyone needs these three documents—a will, a health care power of attorney, and a financial power of attorney.

A will. If you die with no will, state law has a pecking order as to who will inherit your assets, starting with your spouse and children. A will must be executed and witnessed appropriately to be valid.

Your will should name a personal representative, otherwise known as an executor. This should be done far ahead of time to be certain that they are willing and able to undertake the task. Let this person know the location of a copy of your will.

A living will details your end-of-life choices. Without authorized directions, your family may not be able to make the decisions you’d want. A living will can also include funeral wishes.

A medical power of attorney gives the individual you select, the authority to make health care decisions for you, if you’re incapacitated.

A financial power of attorney lets your appointed agent make financial decisions, pay your bills, and take charge of your bank accounts if you’re unable to do so.

A revocable living trust is a document that lets you assemble all of your assets in one place. The assets must be retitled to the trust, not to you as an individual. A trust can help with out-of-state real property or leaving money to a child with special needs who is receiving means-tested government benefits. When you die, the assets in the trust aren’t subject to probate, and are distributed as you instructed in the trust.

An experienced estate attorney will take you through all of the steps to analyze your situation, review assets, family relationships and all of the information needed to create an estate plan that will give you peace of mind and protect your family.

05/19/2017

Trying to create an estate plan is a lot like do-it-yourself dentistry. It just doesn’t work.

There are people who think that creating an estate plan is something they can tackle. After all, there’s plenty of information on the web, including templates for important provisions. The cost of cleaning up after you pass, will be long remembered and not appreciated by your heirs.

Modern Medicine’s article “Estate planning: Don’t make these mistakes” says that, in some instances, folks try to create their estate plan without consulting an experienced lawyer. These folks think that because they may have a general understanding of estate planning, they can do it for themselves without the help of an estate planning lawyer. But everyone’s different, and boilerplate forms won’t always cover a specific situation. Take a look at this list of potential estate planning mistakes that you can help to avoid by working with an experienced attorney.

Failing to update your estate plan. Your life and financial circumstances may change over time. As a result, you need to change your estate plan accordingly. You should also make sure to review your plan regularly.

Failing to revise your will. The will that you drafted 15 years ago may no longer apply for a variety of reasons. You can’t just cross-out provisions or names on an old will, add or change information, and initial the document. That won’t work and could revoke the entire will. You need to see an estate planning attorney.

Failing to use more than joint tenancy to avoid probate. Many assets are transferred outside of wills, like assets titled in joint tenancy that pass to the surviving joint tenant, not under your will. Remember this only avoids probate on the first death. When the surviving spouse dies, the home will usually end up going through probate.

Failing to coordinate the will and trust. If you have a will and a trust, you must ensure that the documents are aligned so your wishes will ultimately be carried out. If you don’t, there will be delays and unnecessary expenses.

Failing to title assets correctly. You want your primary residence, vacation home, bank accounts, brokerage accounts, retirement accounts and vehicles to be passed on to the persons you designate. Therefore, be certain to keep beneficiary designations up-to-date and to properly title accounts.

Failing to name successor or contingent beneficiaries. If you don't update a beneficiary designation after a beneficiary dies, there’ll be no successor to receive those assets when you die. You should name more than one beneficiary on your accounts and keep your designations up to date.

Failing to name a person to make health care decisions. Designate someone that you trust to follow your wishes as far as your healthcare decisions in the event you are incapacitated. Depending on the state, this may be called a living will, a medical directive, a health care proxy or an advance health care directive.

Failing to update outdated financial powers of attorney. If you chose a person to make financial decisions for you with a power of attorney some years ago, his or her circumstances may have now changed, along with your situation. Consult with an attorney about how to proceed.

We like to think of ourselves as intelligent and self-reliant individuals. However, there are certain things in life, estate plans among them that are best left to professionals. There is a reason for that. Estate law differs from state to state and templates that you find on the web may not be applicable to your situation. They might also not be legal. Do all the online research you like, but when it comes to creating the legal documents for your estate plan, work with an experienced estate planning attorney.

05/17/2017

Saying good-bye to your beloved spouse is unimaginable, and yet it happens every day. Make sure that you are both prepared for the business side to help the surviving spouse and family.

Once the basics of estate planning are covered—a will, durable power of attorney, healthcare power of attorney, living will and any trusts—it’s time to dig into the day-to-day details of life that the surviving spouse will need to deal with. In “How to prepare for loss of a spouse,” the Idaho Statesman outlines some of the information that you need to share now, so that a grieving spouse will be better equipped to manage the challenges of life after one of you passes.

Talk with Your Spouse. Keep your spouse up-to-date and share your passwords and other critical information, as well as where to locate them. Speak with your estate planning attorney so if only one of you handles finances, the other will be prepared. Along the same lines, be open and transparent and be sure to title your accounts properly so you know which assets will be passed directly to your spouse (like your home that lists both of you on the title) and those assets that’ll be transferred via beneficiary designation. You should also review your beneficiary designations for IRA accounts and other retirement plans.

Bank Accounts. You should open bank accounts jointly so that you don’t keep a spouse from accessing funds to pay bills and final expenses. The same thing applies to credit card accounts and utility bills, because the card company or utility typically won’t even talk to you, if you’re not named on the account.

Social Security. It’s a hard to claim these benefits when your spouse has just passed, but making the right choice can make a big difference in the benefits you receive over your lifetime. It’s the same deal with a pension plan with a survivor-benefit option.

Budgets. Both spouses should get to know the household budget and your monthly operating expenses.

These kinds of preparations and conversations are a difficult, but necessary part of a loving partnership. Having another member of the family present for these conversations may be useful, just as you would bring a family member or trusted friend to an important doctor’s visit. Sometimes extreme emotions make it hard to process information, so a second set of ears can be helpful.

05/15/2017

Here’s a way to keep your stock shares and hit the mark on your annual RMD goal at the same time.

If you are reluctant to sell off certain stocks in your IRA, but need to satisfy the IRA’s annual RMD (Required Minimum Distribution), this will come as welcome news. According to Kiplinger, in an article titled “Retirees, Shift Stock to Satisfy Your RMD,” an “in-kind” transfer provides the perfect solution.

There’s no requirement that you withdraw cash from your IRA, just that a certain amount has to be withdrawn each year starting at age 70½ for tax purposes. It’s fine to have stock or mutual fund shares transferred from your IRA to a taxable account to satisfy your RMD.

Retirees thinking about this move are those who are more likely not to need their RMD for spending money and who feel their stocks can grow in value. Another option is to sell the stock and use the payout from your IRA to repurchase the shares in a taxable account. However, a transfer has some advantages: (i) you’re certain to keep the money invested and (ii) you’re saving some money in transaction expenses.

Both you and the IRS will receive a 1099-R from the IRA custodian that shows a distribution of the amount that the shares were valued at on the day of the transfer. You’ll owe tax on the full amount, assuming you hadn’t made non-deductible contributions to the IRA.

Remember that the market can fluctuate between the time you request the in-kind transfer and when it is actually executed. Transfers are valued using the market close price on the day of transfer. Make sure to circle back with your custodian after the move is made to find out the actual value so you are certain to satisfy the RMD. If the transfer was short of your required minimum distribution, you’ll need to move more shares or withdraw cash. If you fail to do this, you’re subject to a penalty of 50% of the shortfall.

Provided that you have earned income from a job, you can make contributions to a Roth IRA and contribute up to the amount of your earned income for the year. The max is $5,500 for 2016 (or $6,500 if you’re 50 or older). If you work and your spouse doesn’t, you can even contribute up to $5,500 (or $6,500) to a spousal Roth IRA on his or her behalf, as long as your total contributions for both accounts don’t exceed the amount you earned from working. Therefore, your earned income for the year would need to be at least $13,000 if you’re 50 or older and want to contribute the maximum for yourself and your spouse.

In order to figure your maximum contribution, add up your earnings from working, such as any wages, commissions, bonuses, and self-employment income, along with alimony and maintenance payments through a divorce, since these must also be included in the earned income calculation for determining Roth IRA contributions. However, your pension and investment income is not counted.

There’s no maximum age for contributing to a Roth IRA, but you must be under age 70½ to contribute to a traditional IRA. To qualify for Roth contributions this year, your modified adjusted gross income must be below certain limits. The contribution amount is phased out as well. The MAGI (“modified adjusted gross income”) figure used to see if you earn too much to contribute to a Roth is calculated differently than the earned income figure used to determine how much you can contribute.

A Roth conversion, that is, converting a traditional IRA to a Roth IRA, might be a good option for retirees who would like the Roth IRA benefits but aren’t earning enough to make the maximum contribution. If you decide to convert to a Roth IRA, make sure to include the taxes that you’ll owe on the converted amount or on part of the converted amount, if non-deductible contributions were made in the past. Speak with an estate planning attorney and financial advisor if you are not sure if this is the right move for you.

05/10/2017

Caring for aging parents forces many women to work less or leave the workplace entirely. The impact on women’s careers and economics is expected to grow.

Combine the good news of people living longer and the bad news of the increasing cost of caring for the elderly and you have an economic burden that is having a disproportionate impact on mid-career women, according to “Elder caregiving a growing burden to women in mid-career,” an article in The University of Buffalo’s UBNow news website.

The study found that women caregivers were about 8% less likely to work. After providing care, they were 4% less likely to be working. The study was presented at the Women Working Longer Conference hosted by the National Bureau of Economic Research. The research also found that with caregiving increasing, more current generations of women are more likely to provide care than women previously, since millions of individuals are providing care for their parents or their in-laws.

Data was gleaned from the University of Michigan, which has been monitoring participants for more than two decades. The data used in the study of nearly 9,500 people showed that about 33% of the women had provided care for an elderly parent, parent-in-law, or a spouse. That care can entail assisting a loved one with activities of daily living such as eating, bathing, or dressing. The caregiving for parents, peaks at about 56, and caregiving for a spouse isn’t widespread until the late 60s. In addition, with an aging population, the demand for care is apt to rise. Estimates are that 69% of the elderly will require help with daily activities, and 20% of those people will need assistance for five years or more, with the majority of the help coming from wives and daughters.

With baby boomers retiring, these needs will intersect with the need to retain a productive workforce. The caregiving challenge is growing at a time when more women are in the workforce and are working longer. However, the National Association of Insurance Commissioners reported recently that 10% of caregivers dropped their hours at their jobs due to the demands of caregiving, and about 6% left paid work entirely. In addition, 17% of caregivers take a leave of absence, and 4% decline to take a promotion.

A 2011 AARP study from its Public Policy Institute valued the informal care given by family members in 2009 at more than $450 billion, twice the estimated value of formal care. The long-term economic impact of so many women leaving the workforce and losing income, is expected to have a significant impact on women, their families and the workplace.